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For Air Asia, the plucky Malaysian budget airline, is attempting to roll out a business model that no other operator – not even mavericks like Ryanair’s Michael O’Leary and easyJet’s Stelios Haji-Ioannou – believe can succeed: long-haul, low-cost travel.
The last airline to try it, Oasis Hong Kong, lasted just 18 months before collapsing last year as high fuel costs and intense competition on the Hong Kong-London route dragged it down. And you ‘d be forgiven for thinking that the current climate, with airlines around the world racking up massive losses as passenger numbers slide, is hardly a better time to launch such a speculative venture.
But Azran Osman-Rani, the cheery chief executive of Air Asia X, the subsidiary that is operating the KL-Stansted flights, is confident that he can succeed where Oasis failed. "There’s a lot of latent demand and we think we’ve got the right elements to make the economics work," he told me when I flew up to KL to meet him on Monday. Like other no-frills airlines, Air Asia is used to operating on a very frugal cost structure and, unlike the skeptics, Osman-Rani believes that the low-cost approach can be applied to long-haul. Air Asia X currently operates just four planes on various long-haul routes to Australia and Osman-Rani says that the cost structure is already 50pc lower than full-service airlines with 100 aircraft.
"The two main advantages that help us keep the costs down come from how many hours a day we fly our planes and how many seats we fill," he explained. "We fly 18 hours a day as opposed to 12/13 hours for legacy airlines, whose aircraft spend a lot of time parked."
He added that, Air Asia will be able to fill most of its seats on the KL-London flights because of through-traffic from its well-developed network around Southeast Asia. Eighty-one percent of the Air Asia passengers flying to KL from Australia are in transit and Osman-Rani believes that many of those using the KL-Stansted route will also be connecting to other destinations in the region. I’ll have more insights from the interview with Osman-Rani in the coming days, including a detailed look at how Air Asia keeps its costs down and why he believes that no-frills airlines are fundamentally changing the way we travel.
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